Cost of trade credit if the discount is not taken:-
=(1/99)*(365/15) =25%
The answer is: Yes because the bank loan is cheaper than their trade credit.
Simple Simon's Bakery purchases supplies on terms of 1/10, Net 25. If Simple Simon's chooses to...
Simple Simon's Bakery purchases supplies on terms of 1.1/10, net 30. If Simple Simon's chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. A local bank has quoted Simple Simon's owner an interest rate of 11.2% on borrowed funds. Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Use 365 days for a year.)
Simple? Simon's Bakery purchases supplies on terms of 1.5/10, net 30. If Simple? Simon's chooses to take the discount? offered, it must obtain a bank loan to meet its?short-term financing needs. A local bank has quoted Simple? Simon's owner an interest rate of 10.1 % on borrowed funds. Should Simple? Simon's enter the loan agreement with the bank and begin taking the? discount? (Hint: Use 365 days for a? year.) The cost of forgoing the discount is _?_?%. ?(Round to...
Simple Simon's Bakery purchases supplies on terms of 1.7/10, net 29. If Simple Simon's chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. A local bank has quoted Simple Simon's owner an interest rate of 10.5 % on borrowed funds. Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Use 365 days for a year.) Simple Simon's can earn an effective rate of %....
1 pts Question 5 A firm is offered credit terms of 2/10 net 45 by most of its suppliers but frequently does not have the cash available to take the discount. The firm has a credit line available at a local bank at an interest rate of 12 percent. The firm should give up the cash discount, financing the purchase with the line of credit take the cash discount, financing the purchase with the line of credit, the cheaper source...
Hand-to-Mouth (H2M) is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or take out a loan. They owe the supplier $ 10 comma 000 with terms of 2/10 Net 40, so the supplier will give them a 2 % discount if they pay by today (when the discount period expires). Alternatively, they can pay the full $ 10 comma 000 in one month when the invoice is due. H2M is considering...
Need the EAR for each alternative please Hand-to-Mouth (H2M) is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or take out a loan. They owe the supplier $11,000 with terms of 2/10 Net 40, so the supplier will give them a 2% discount if they pay by today (when the discount period expires). Alternatively, they can pay the full $11,000 in one month when the invoice is due. H2M is considering three...
Hand-to-Mouth (H2M) is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or take out a loan. They owe the supplier $ 11 comma 000 with terms of 2.4/10 Net 40, so the supplier will give them a 2.4 % discount if they pay by today (when the discount period expires). Alternatively, they can pay the full $ 11 comma 000 in one month when the invoice is due. H2M is considering...
Hand-to-Mouth (H2M) is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or take out a loan. They owe the supplier $ 10 comma 000$10,000 with terms of 22/10 Net 40, so the supplier will give them a 2 %2% discount if they pay by today (when the discount period expires). Alternatively, they can pay the full $ 10 comma 000$10,000 in one month when the invoice is due. H2M is considering...
Hand-to-Mouth (H2M) is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or take out a loan. They owe the supplier $13,000 with terms of 1.8/10 Net 40, so the supplier will give them a 1.8% discount if they pay by today (when the discount period expires). Alternatively, they can pay the full $13,000 in one month when the invoice is due. H2M is considering three options: Alternative A: Forgo the discount...
The Reynolds Company buys from its suppliers on terms of 2/10, net 58. Reynolds has not been utilizing the discount offered and has been taking 70 days to pay its bills. The suppliers seem to accept this payment pattern, and Reynold’s credit rating has not been hurt. Mr. Duke, Reynolds Company’s vice-president, has suggested that the company begin to take the discount offered. Mr. Duke proposes the company borrow from its bank at a stated rate of 11 percent. The...